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Blog :: 10-2012

The Buy/Sell Dilemma

We are often asked what is the best strategy for buying a home when you have to sell your current home. Unfortunately there is no correct answer or optimal strategy. Instead you have to evaluate each buyer's personal situation in rendering advice.

For instance, if a buyer is only looking to move if they purchase a specific property then the best strategy is probably to negotiate with the seller of the specific property first. If the buyer cannot come to an agreement on the specific property then there is no point in listing their current home for sale. On the other hand, if the buyer can come to an agreement with the seller then the buyer will want to list their current home for sale as quickly as possible.

In contrast, if a buyer is set on moving regardless of a specific property coming for sale then the buyer would probably be best advised to put their house on the market immediately. The buyer can then start to identify types of properties and areas they might be interested in. By the time their home sells they will have likely identified one or more homes that suit their needs.

In either case, sellers of homes are very wary of home selling contingencies. In the first scenario above, the buyer may have to agree to a so-called "kick out clause", where the seller can continue to market the home to other buyers and should the seller find another purchaser before the buyer can sell their home, the seller can terminate the contract with the buyer.

Most sellers will agree to a provision in contract that terminates the kick out clause upon the buyer signing a contract for the sale of their current home.

If you have a question about your specificsituation, please contact us. We're here to help.

Procuring Cause in Vermont

There seems to be a misunderstanding of what the standard is for "procuring cause" for a real estate agent to be entitled to a commission as a buyer's representative in Vermont. The Vermont Supreme Court has set the standard under Vermont law. Buyers (and sellers) should be aware of this standard when a real estate agent claims that they are owed a commission as the "procuring cause" of the sale. The legal standard is as follows:

1. It is not enough to simply show the property once or even twice to a buyer. The Vermont Supreme Court has said " [T]he assumption that the broker first interested [the purchaser] in buying the property is not enough to constitute him as the procuring cause of the sale. Although the brokers efforts need not be the sole cause of the sale, it is essential that they dominate the transaction and amount to something more than an incidental or contributing influence. If it were otherwise, every broker who has any concern with the property might earn separate commissions on a single sale. 123 Vt. at 154-155, 186 A.2d at 183. Thus, the agent must demonstrate that they were the dominate agent in the transaction and assisted the buyer in more than just seeing the property. The agent must show that they advised and assisted the buyer throughout the transaction until the purchase was complete.

2. Under Vermont law, to be entitled to a commission, "a broker must show that he procured a purchaser ready, willing, and able to purchase at the price and upon the terms prescribed by the seller." One example where the agent would not be considered the procuring cause under this standard is where the buyer is shown a property prior to selling their home. If the buyer cannot purchase the new property until they sell their existing home then the buyer is not currently "able" to purchase the property. The agent must continue working with the buyer until they are "able" to purchase to be considered the procuring cause. (See Ellis-Gould Corp. v. Kelly, 134 Vt. 255, 257, 356 A.2d 497, 498 (1976)). Thus, in this example the agent would have to be assisting in the purchase at the time that the buyer's house is sold.

3. Finally, the agent claiming to be procuring cause must also show there was continuity and no break in the chain of events. If the agent shows the property in January to a buyer but the buyer decides to hold off on a purchase until June, the agent who first showed the property would not be entitled to a commission as the procuring cause unless the agent continued working with the buyer in June when they decided to purchase the property. If the buyer hires another agent in between January and June, the new agent would be entitled to the commission as the procuring cause.

An agent claiming a commission as the "procuring cause" must be able to show that each of the factors above have been satisfied. If they cannot then, under Vermont law, the agent has not met the legal standard of "procuring cause" and is not entitled to a commission.

Hopefully this helps clarify some of the confusion.

If you still have questions about procuringcause, or any other real estate lingo, contact us.

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